Today just 400 Americans have more wealth than half of all Americans combined.....If you can't bring yourself to call that a financial coup d'état, then you are simply not being honest about what you know in your heart to be true.
- Michael Moore, March 5th, 2011. (1)
From Wealth Accumulation to Political Engineering
It should not surprise anyone to hear that the accumulation of obscene wealth does not sate the appetite of the super rich for more wealth and power. As we detailed in an earlier piece in this forum (2), right wing interests in the US have steadfastly pursued a program of sabotaging the effectiveness of state mechanisms that could temper the upward distribution of wealth in the present and facilitate social mobility in the future. The financial crisis that commenced in 2007-08 has provided magnificent opportunities to accelerate this program, especially now that the 2010 elections transferred control of the House of Representatives and 22 state legislatures from the Democrats to the Republicans. (3) The crash in housing values and the economic recession have torpedoed tax revenue collection and jeopardized government budgets at all levels. The right has strained every sinew to reject three of the four possible responses to the budget crises (raising taxes, economic stimulus spending, and printing money to pay off government debt), and insisted on the one remaining response: reducing or eliminating government programs (with the exception of defense and security spending, naturally).
Consequently, budget proposals from the Republican-controlled House of Representatives and Republican governors in many states have provoked dramatic confrontations by demanding savage cuts in all manner of government social welfare programs, from education to health care, job retraining, unemployment assistance, public park maintenance, and much more. Apart from upper class greed, at least three little-discussed sources of support have emboldened the Republican budget austerity campaign. The first is the groundswell of lower and middle class sentiment in favor of tax cuts. Four decades of wage stagnation (4) have left the great mass of Americans without hope of increasing their income through work. In desperation, they cling blindly to the Republican promise of tax reductions as a route to financial survival. (5) Second, President Obama's surrender to Republican demands for tax breaks for the wealthy and for corporations — most famously the extension in December 2010 of the Bush tax cuts for wealthiest Americans for at least another two years — all but guaranteed acute budget crises this year and next. Third, top officials from China, now the largest holder of US Treasury debt, have sternly warned the US against diluting the value of the dollar (through excessive deficit spending and subsequent currency emissions, e.g.). The US must take China's threats very seriously, since even modest selling of Treasury bills from China would spike US borrowing costs - such was the central, somber conclusion from secretive financial war games the Pentagon and several US intelligence agencies conducted in 2009. (6)
We can be sure that the slashing of social safety nets across America will exacerbate the already gross inequalities of wealth in the country. But the right has much worse in mind. Republican governors and Congressmen are demonstrating a determination to exploit budget crises to impose structural shifts in the distribution of political power. The widely-publicized attempts to shatter public-sector trade unions in Wisconsin and many other states by eliminating their collective bargaining rights (which are guaranteed only in state law, not federal law, and therefore vulnerable to abrogation at the state level) are just one dimension of this campaign. Long weakened private-sector trade unions are also in the right's crosshairs. In all, at least 16 states are proceeding with anti-union legislation of one kind or another.
Contrary to popular perception, trade unions defend more than their parochial interests. To begin with, they counter big business's campaign contributions to Republicans by funneling support to Democrats — 92 percent of trade unions' political campaign contributions went to Democrats from 1990 through 2010, e.g. (7) More important, they play a key role in maintaining civil society, by channeling defense of all manner of regulations protecting society against corporate malfeasance (inhumane work conditions, child labor, pollution, etc.). The right's aggressive attempts to roll back trade unions bodes very badly for all of American society.
Beyond the assault on public- and private-sector trade unions, Republican governors are stealthily preparing to transfer masses of publicly owned assets into the hands of private corporations, including sweetheart deals for cronies (a theme we introduced in this forum last year (8)). Thus, language buried in Wisconsin Governor Walker's Budget Repair Bill removes control over the sale of energy generation facilities from a publicly controlled commission in favor of hand-picked appointees of the governor. Further, the bill empowers these appointees to sell off the assets in question at any price they choose, to whomever they choose, no questions asked. (9) The new Republican governor of Michigan has roughly similar designs. He is granting more or less plenipotentiary powers over municipalities across the state to “emergency financial managers”, who could abrogate standing labor contracts with municipal employees. The emergency manager could even dissolve municipal government entirely, and could replace it with a corporation, thus fast-tracking privatization of any municipal services that are potentially profitable, while discontinuing all others! (10)
Predictably, Republicans in Congress are marching hand-in-hand with Republican state governors, attempting to cripple a huge swathe of federal regulatory agencies who constrain the rapaciousness of large corporations. In February the Republican-controlled House of Representatives proposed funding cuts for the Securities and Exchange Commission, the Commodity Futures Trading Commission, Planned Parenthood, and the Consumer Financial Protection Bureau, among others. (11) They proposed slashing support for higher education, public transportation, and much else, naturally. (12) The Republicans also stooped to the level of denying climate change, with the aim of permanently forbidding the Environmental Protection Agency's to address greenhouse gas emissions. We should expect sustained pressure in this direction in the future. The Republicans do not seem to care that the Clean Air Act has saved more than 160,000 lives in 2010 alone. (13) Astonishingly, a majority of Republicans in Congress now deny the existence of man-made climate change, or oppose reductions in greenhouse gas emissions. (14) Characteristically, the Republicans blocked a Democratic proposal to rescind federal tax breaks to oil companies. (15)
Every element of the right's program is audacious and preposterous, from budget slashing to union busting to deregulation. None of it makes economic sense. In the near-term, for instance, economists of all stripes warn that the House Republicans' budget proposals stand to reduce US GDP by at least half a percent. The right's nationwide campaign of misinformation labeling public-sector pensions as luxurious and taxpayer sponsored (they are neither luxurious nor taxpayer sponsored) has generated a wave of “pension envy” and antipathy towards government employees at all levels, and is driving droves of them to retire ahead of schedule, lest Republican-controlled legislatures connive to reneg on pension commitments to current government employees. (16) The shrill denigration of public-sector workers will certainly scare quality people away from government service—including teaching - for many years. (17)
The President AWOL
Today, three quarters of a century after FDR rallied the nation to back his New Deal, a liberal president, with a background in community organizing, is standing largely silent as the single biggest rollback of American workers’ rights in modern times unfolds. It’s shaping up to be one of the great, and most tragic, ironies in American political history.
- Sasha Abramsky, Salon.com (18)
President Obama's unwillingness to spearhead the defense of public-sector trade unions and protect government programs is tragic indeed, given the ferocity of the current assault from the right, and the consequent threat to the viability of civil society in the US. His passivity should not come as a surprise, however. Obama's fealty to corporate campaign donors is well-established, of course, as is his desire to court center-right non-aligned voters in the 2012 election (these voters are assumed to be poorly disposed towards trade unions of any stripe). Less well known is Obama's role in undermining teachers' unions even before the current uproar began in Wisconsin. (19) Whatever may be the White House's mixture of motives and calculations, sources report that the administration clamped down on the Democratic National Committee when it tried to use the President's networks to mobilize resistance to the Republicans' aggression in various legislatures. (20)
What works for Obama might not work for the nation, of course. It is true, on the one hand, that the left is mobilizing even without leadership from the White House. The audacity of the authoritarian surge has galvanized unprecedented levels of outrage, with sustained resistance and mass street mobilization around the country — up to 100,000 in Madison, WI this Saturday. (21) On the other hand, the President's timidity is no doubt cementing widespread indifference and disaffection towards the Democratic party. The upshot could well be another swathe of middle and lower class voters tuning out the Democrats as irrelevant to their needs, which would gift the Republicans even more power in upcoming election cycles. Absent the rise of a third party akin to European social democrats, the future of political life in the US does not look bright.
(1) “America is Not Broke” (speech delivered in Madison, WI)
(2) “State Sabotage and the US Right: More to Come?”, October 2nd, 2010.
(3) Michael Winship, “Across the US, GOP lawmakers Build States of Denial”, CommonDreams.org, February 18th, 2011.
(4) Many economists rate present-day wages in the US as approximately equal to those of 1973 or 1974.
(5) I owe this insight to Frank Emspak, executive producer of Workers Independent News, on Democracy Now!, March 1st, 2011.
(6) Eric J. Weiner, The Shadow Market, New York, Scribners, 2010, pp. 14-17.
(7) www.opensecrets.org, “Labor”.
(8) “Budget Austerity in the West: New Food for the Privatization Parasite?”, October 22nd, 2010.
(9) Paul Krugman, “Shock Doctrine U.S.A.”, New York Times, February 24th, 2011.
(10) “Michigan Workers Jam Capitol to Protest Union Plan”, Reuters, March 8th, 2011; Naomi Klein on “Democracy Now!”, March 9th, 2011.
(11) Elise Foley, “House Approves Bill with Massive Spending Cuts after All-Night Session”, Huffington Post, February 19th, 2011.
(12) Michelle Chen, “From Wisconsn to Washington, Budget Cuts Draw Battle Lines Against Public”, In These Times,February 19th, 2011.
(13) Center for Biological Diversity, press release: “New Bill Would Cripple America's Most Important Pollution Law”, March 3rd, 2011.
(14) Suzanne Goldenberg, “Democrats Roll out Climate Change Big Guns, Republicans Remain Immune,” The Guardian, March 9th, 2011.
(15) Foley, “House Approves Bill...”, op. cit.
(16) Regarding the misinformation campaign, see David Cay Johnston, “Who 'Contributes' to Public Workers' Pensions?”, Tax.com, March 9th, 2011. On the Right stoking “pension envy”, Geoff Mulvihill, “Anger Brews over Government Workers' Benefits”, AP, March 8th, 2011. Retirement applications from public employees began rising sharply in 2010, as soon as the Right ramped up its rhetoric against government employees. The surge was an astonishing 60 percent in one year in New Jersey, e..g. (Jarrett Renshaw, “NJ Public Workers are in a Hurry to Retire”, NJ.com, February 28th, 2011).
(17) For vivid testimony, see Andrew Dornon's “Open Letter to President Obama from a Student Who Wants to be a Teacher” CommonDreams.org, March 9th, 2011.
(18) “Mr. President, Use the Damn Bully Pulpit”, Salon.com, March 10th, 2011.
(19) I have in mind the “Race to the Top” federal school funding program. See Brian Tierney, “The Wisconsin Effect: Union Power Rediscovered”, CommonDreams.org, March 9th, 2011.
(20) Donna Smith, “Trauma for Working Class in America: Fray or Distraction?”, CommonDreams.org, March 8th, 2011 (citing a New York Times piece).
(21) Ben Jones, “Pro-Union Demonstratos Crowd Madison for Massive Rally to Take Political Fight to the Ballot Box”, PostCrescent.com, March 13th, 2011.